Posts Tagged ‘Business Lessons’

Well we saw a range of different pitches in the Den last night from shoes to cleaning materials to an online recipe community.  As always, there was a lot of learning points.

Nerves

Nerves can either get in the way or drive us on.  The first lady who secured investment was nervous but she held her nerve despite some intense scrutiny. By contrast another business owner who was offering wine in a sealed plastic glass seemed overcome by nerves.

Pricing matters

The issue of pricing comes up week after week.  Price too high and you run the risk of being viewed as unrealistic.  Price too low and you probably have a business model that is not attractive to an investor.  I am sure pricing is an area that challenges most businesses.

Don’t over value your business

While there are many variations and models out there for valuing a business, what is clear is that it is important to do a sense check.  I am sure that if more businesses that were seeking funding from the Dragons’ stood back and asked themselves if the valuation made sense, there would be a greater probability of investment.

Be willing to engage in a sensible negotiation

Last night we saw a common situation where a business (the infection busting cleaning products) is growing, knows that the help of a Dragon could make a huge difference but was inflexible when it came to negotiations.

You need to demonstrate your belief that you will deliver

The infection busting cleaning products business was a classic example of this.  The business wanted to give the investor a 5% stake, had clear growth profit targets and was willing to offer a 10% stake. 

 James Caan made an offer for all of the money but for a 30% stake.  He did however, offer to return 10% back to the owner if the promised profit targets were met. 

Essentially he was offering a risk sharing agreement.  You deliver what you said you can and I will reduce my stake.  The business owner for whatever reason decided not to accept the offer.

If you want someone else to risk their money you need to be willing to show that you will take some risk.

So what did you learn from this weeks Dragons’ Den?  Leave your comments with your insights.

Last night on Dragons’ Den we saw a range of quite diverse pitches from businesses seeking investment.  So what were the key business lessons from week 2 of the 2009 series?

Lesson 1: Make sure you provide all the vital information

The revelation of the market size by the company that was seeking investment for their corporate team building using drumming changed perceptions.  Especially when they revealed that franchises were being sold for £100k.

Lesson 2: You need to be able to articulate your business and financial model

Too often businesses were pitching ideas where they could not articulate the reasons for the pricing structure or how they were going to make it profitable.

Lesson 3: Understand that a gamble and a calculated risk are different

The professional poker player was a good example.  The Dragons’ made it clear that they are happy to take calculated risks where they have some control but not a complete gamble.

Lesson 4: Show that there is demand

The woman that had created the product that would simplify passing a cable through a cavity wall did this brilliantly.  She already had significant demand from BT and saw the opportunity to take it worldwide.

You can watch Dragon’s Den every Wednesday at 9pm on BBC Two or on the BBCiplayer.